<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
THE CINCINNATI GAS & ELECTRIC COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
<TABLE>
<S> <C>
The Cincinnati Gas & Electric Company Jackson H. Randolph
P.O. Box 960 Cincinnati, Ohio 45201-0960 Chairman, President and Chief Executive Officer
</TABLE>
April 6, 1994
Dear Shareholder:
You are cordially invited to attend the 1994 Annual Meeting of Shareholders
of The Cincinnati Gas & Electric Company. This year's Meeting will be held in
the Oak Room of Piatt Park Center/ Cincinnati Club Building, 30 Garfield Place,
Cincinnati, Ohio, on Wednesday, May 18, 1994 at 11:00 A.M.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Meeting. The Annual Meeting is our
regular yearly meeting at which Directors are to be elected and auditors are to
be appointed. During the Meeting there will be a brief report on the operations
of the Company.
Please sign, date and return your proxy card for the Annual Meeting in the
envelope provided as soon as possible. Your vote is important, regardless of the
size of your holdings. By signing and returning your proxy card promptly, you
are assuring that your shares will be voted even if you are unable to attend the
Annual Meeting.
Thank you for your continued interest in the Company.
Sincerely,
Jackson H. Randolph
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 1994
TO THE SHAREHOLDERS OF
THE CINCINNATI GAS & ELECTRIC COMPANY:
Please take notice that the Annual Meeting of Shareholders of The Cincinnati
Gas & Electric Company will be held in the OAK ROOM of PIATT PARK
CENTER/CINCINNATI CLUB BUILDING, 30 GARFIELD PLACE, Cincinnati, Ohio, on
Wednesday, May 18, 1994 at 11:00 A.M. for the purpose of:
1. electing one Class III Director to serve for a two-year term expiring in
1996, and four Class I Directors to serve for three-year terms expiring
in 1997;
2. approving the appointment of Arthur Andersen & Co. as auditors of the
Company for 1994;
3. acting upon, if presented at the meeting, a shareholder proposal which
the Board of Directors OPPOSES;
and to consider any other business that may properly come before the meeting.
Holders of record of Common Stock at the close of business on March 21, 1994
will be entitled to vote at the meeting.
DONALD R. BLUM, SECRETARY
Cincinnati, Ohio
April 6, 1994
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
139 East Fourth Street
Cincinnati, Ohio 45202
PROXY STATEMENT
This solicitation of proxies, mailed on or about April 6, 1994, is made by
the Board of Directors of The Cincinnati Gas & Electric Company, which
recommends voting FOR the election of all nominees as Directors, FOR the
appointment of auditors, and AGAINST the shareholder proposal. Your proxy will
be voted as specified; if not specified, it will be voted in accordance with the
recommendations of the Board of Directors. You may revoke your proxy at any time
before it is exercised by giving notice to CG&E in writing or in open meeting.
VOTING PROCEDURES AND RIGHTS
In accordance with the provisions of the Company's Regulations, the Board of
Directors has fixed the close of business on March 21, 1994 as the record date
for determination of voting rights. Only holders of record of Common Stock on
the record date will be entitled to vote at the meeting. A majority of such
holders, present in person or represented by proxy, constitutes a quorum.
As of the close of business on the record date, there were outstanding and
entitled to vote 88,498,369 shares of Common Stock, each share having one vote.
The number of shares designated on the enclosed proxy card represents the shares
held in your name on the record date. If you are a participant in the Dividend
Reinvestment and Stock Purchase Plan, the number also includes shares credited
to your Plan account.
With respect to the election of directors, the five candidates receiving the
greatest number of votes will be elected. The shares of Common Stock represented
by a signed proxy, unless otherwise specified, will be voted for the election of
all nominees of the Board of Directors. If voting is cumulative as a result of
the request of any holder of Common Stock and in the absence of specific
instructions marked on the signed proxy, such shares will be voted for such of
the nominees as the persons designated as proxies may in their discretion
select. Under Ohio law and the Company's Articles of Incorporation and
Regulations, an abstention or broker non-vote in the election of directors will
not be the equivalent of a negative vote, although the failure by a broker to
return a proxy card for certain shares will result in such shares not being
counted towards a quorum.
The affirmative vote of a majority of the shares of Common Stock
constituting a quorum is required to approve the Company's auditors. The shares
of Common Stock represented by a signed proxy, unless otherwise specified, will
be voted for approval of the Company's auditors. Under Ohio law and the
Company's Articles of Incorporation and Regulations, an abstention or broker
non-vote will have the following effects: An abstention with respect to a share
represented at the meeting, in
1
<PAGE>
person or by proxy, will have the effect of a negative vote; the failure to
return a proxy card will not have the effect of a negative vote, although the
shares covered by such proxy card will not be counted towards a quorum.
Votes will be tabulated preliminarily by the Company acting as its own
transfer agent. Inspectors of election, duly appointed by the presiding officer
of the meeting in accordance with the provisions of the Company's Regulations,
will definitively count and tabulate the votes and determine and announce the
results at the meeting.
ELECTION OF DIRECTORS
In accordance with the provisions of the Company's Regulations, the Board of
Directors is divided into three classes (Class I, Class II, and Class III), with
all classes as nearly equal in number as possible. One class of directors is
ordinarily elected at each annual meeting of shareholders for a three-year term.
The Regulations further provide that the Board of Directors shall consist of
not less than 11 and not more than 15 persons, as shall be fixed from time to
time by the Board. The number of directors, which had been fixed at 11, was
increased to 12 by resolution of the Board of Directors on March 16, 1994,
creating a vacancy in Class III, which class is comprised of only three
directors, while the other two classes each have four.
Information pertaining to each of the nominees and directors is set forth
below. All nominees, except Phillip R. Cox, are now directors and were elected
to their present terms as directors in Class I at the Annual Meeting of
Shareholders held April 17, 1991. Mr. Cox has been nominated by the Board to
fill the vacancy in Class III for a two-year term expiring in 1996. Neil A.
Armstrong, C. Robert Everman, John J. Schiff, Jr., and Dudley S. Taft have been
nominated by the Board for election as directors in Class I for three-year terms
expiring in 1997.
Each of the nominees consented to be nominated and agreed to serve if
elected. If any nominee is unable to serve (an event which is not anticipated),
the proxies will be voted for a substitute nominee designated by the Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR ALL NOMINEES,
DESIGNATED IN THE PROXY AS ITEM 1.
NOMINEE FOR ELECTION AS CLASS III DIRECTOR WITH TERM EXPIRING IN 1996
(INCLUDING BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS)
PHILLIP R. COX (AGE 46)
President and Chief Executive Officer, Cox Financial Corporation (financial
planning). Director of Cincinnati Bell Inc. and the Federal Reserve Bank of
Cleveland.
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<PAGE>
NOMINEES FOR ELECTION AS CLASS I DIRECTORS WITH TERMS EXPIRING IN 1997
(INCLUDING BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS)
NEIL A. ARMSTRONG (AGE 63)
Chairman of the Board, AIL Systems Inc. (manufacturer of electronic devices
and systems; a subsidiary of Eaton Corp.) since December 1988. Completed tenure
as Chairman, Computing Technologies For Aviation, Inc. in September 1992.
Director of CG&E since 1973. Also Director of: Cincinnati Milacron Inc.; Eaton
Corp.; RMI Titanium Co.; Thiokol Corp.; UAL Corp.; and USX Corp.
C. ROBERT EVERMAN (AGE 57)
Senior Vice-President, CG&E and The Union Light, Heat and Power Company
(Union Light), a subsidiary of CG&E. Director of CG&E since 1990. Also Director
of Union Light.
JOHN J. SCHIFF, JR. (AGE 50)
Chairman of the Board, Cincinnati Financial Corporation (insurance holding
company), The Cincinnati Insurance Company, and John J. & Thomas R. Schiff &
Co., Inc. (insurance agency). Director of CG&E since 1986. Also Director of
Fifth Third Bancorp and The Standard Register Company.
DUDLEY S. TAFT (AGE 53)
President and Director, Taft Broadcasting Company (television broadcasting).
Director of CG&E since 1985. Also Director of: Fifth Third Bancorp; The Future
Now Inc.; The Union Central Life Insurance Company; and U.S. Playing Card Co.
CLASS II DIRECTORS WITH TERMS EXPIRING IN 1995
(INCLUDING BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS)
CLEMENT L. BUENGER (AGE 67)
Chairman of the Board, Fifth Third Bancorp and The Fifth Third Bank from
January 1991 until retirement in March 1993; Chairman of the Board and Chief
Executive Officer, April 1989--December 1990; previously President and Chief
Executive Officer. Director of CG&E since 1984. Also Director of Fifth Third
Bancorp.
THOMAS E. PETRY (AGE 54)
Chairman of the Board, President and Chief Executive Officer, Eagle-Picher
Industries, Inc. (diversified manufacturer of industrial products) since April
1992; Chairman of the Board and Chief Executive Officer, March 1989--March 1992;
previously President and Chief Executive Officer. A voluntary petition under
Chapter 11 of the Federal Bankruptcy Law was filed by Eagle-Picher on January 7,
1991. An agreement on the principal elements of a joint plan of reorganization
that provides a basis for Eagle-Picher and its subsidiaries to emerge from
Chapter 11 was announced by Eagle-Picher on November 10, 1993. Director of CG&E
since 1986. Also Director of: Insilco Corp.; Star Banc Corporation; and The
Union Central Life Insurance Company.
3
<PAGE>
JANE L. REES, PH.D. (AGE 70)
Consultant, Professor Emeritus, Family and Child Studies Center, Miami
University, Ohio. Director of CG&E since 1979.
OLIVER W. WADDELL (AGE 63)
Chairman of the Board, Star Banc Corporation until retirement in December
1993; held additional offices of President and Chief Executive Officer until May
1993 and June 1993, respectively. Vice Chairman, Star Bank, N.A. from June 1993
until retirement in December 1993; previously Chairman of the Board. Director of
CG&E since 1989. Also Director of Ohio National Life Insurance Company and Star
Banc Corporation.
CLASS III DIRECTORS WITH TERMS EXPIRING IN 1996
(INCLUDING BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS)
OLIVER W. BIRCKHEAD (AGE 71)
Chairman of the Board, President and Chief Executive Officer, The Central
Bancorporation, Inc. (Central Bancorp) until retirement from Central Bancorp in
February 1988. Chairman of the Board and Chief Executive Officer, The Central
Trust Company, N.A. (Central Trust), March 1987--March 1988; previously Chairman
of the Board, President and Chief Executive Officer. Served as Vice Chairman of
Central Trust from March 1988 until retirement from Central Trust in December
1988. Served as Vice Chairman, PNC Financial Corp. (PNC) from March 1988 until
retirement from PNC in December 1989. Director of CG&E since 1977. Also Director
of The Union Central Life Insurance Company.
GEORGE C. JUILFS (AGE 54)
President and Chief Executive Officer, SENCORP (a holding company). Director
of CG&E since 1980.
JACKSON H. RANDOLPH (AGE 63)
Chairman of the Board, President and Chief Executive Officer, CG&E since May
1993 (and Union Light since June 1993); previously President and Chief Executive
Officer. Director of CG&E since 1983. Also Director of Cincinnati Financial
Corporation and PNC Bank Corp.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1993, CG&E's Board of Directors held 14 meetings. All directors
attended more than 75% of the aggregate number of meetings of the Board of
Directors and applicable committee meetings, except J. L. Rees. The Board of
Directors has five standing committees which facilitate the
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<PAGE>
carrying out of its responsibilities. J. H. Randolph, as President of CG&E, is
ex officio a member of all standing committees as prescribed by the Company's
Regulations.
The Executive Committee, which met once during 1993, is empowered to
exercise in the intervals between the meetings of the Board of Directors the
powers of the Board in the management of the business and affairs of CG&E.
Members of the Committee are O. W. Birckhead, G. C. Juilfs, T. E. Petry, J. H.
Randolph, and D. S. Taft.
The Committee on Audit, which met three times during 1993, is empowered to
recommend to the Board of Directors a firm of certified public accountants to
conduct audits of the accounts and affairs of CG&E, to review accounting
objectives and procedures of CG&E and the findings and reports of the
independent certified public accountants, and to make such reports and
recommendations to the Board of Directors as it deems appropriate. Members of
the Committee are N. A. Armstrong, C. L. Buenger, G. C. Juilfs, T. E. Petry, and
J. L. Rees.
The Finance Committee, which met five times during 1993, is empowered to
make recommendations to the Board of Directors on financial matters. Members of
the Committee are O. W. Birckhead, C. L. Buenger, C. R. Everman, J. J. Schiff,
Jr., and O. W. Waddell.
The Management Compensation Committee, which met twice during 1993, is
empowered to make recommendations to the Board of Directors relating to the
overall compensation arrangements for senior management of the Company, in
particular for those officers who are also directors, and to make
recommendations to the Board of Directors pertaining to any compensation plans
in which officers and directors of the Company are eligible to participate.
Members of the Committee are O. W. Birckhead, G. C. Juilfs, J. J. Schiff, Jr.,
D. S. Taft, and O. W. Waddell.
The Nominating Committee is empowered to present to the Board of Directors,
whenever vacancies occur, names of individuals who would make suitable directors
of CG&E and to counsel with appropriate officers of the Company on matters
relating to the organization of the Board of Directors. Nominations of persons
as candidates for election as directors may be made at a meeting of shareholders
by any shareholder of the Company entitled to vote for the election of directors
at such meeting who complies with the notice provisions of the Company's
Regulations, summarized as follows: Such nominations must be in writing to the
Secretary of the Company and delivered to or mailed and received at the
principal office of the Company not less than 50 days prior to the meeting;
provided, however, that if less than 60 days' notice or prior public disclosure
of the date of the meeting is given to shareholders or made public, notice by
the shareholder must be received not later than the close of business on the
10th day following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made. The notice shall set forth as to each
nominee (i) the name, age,
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<PAGE>
business address, and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and number of any
shares of capital stock of the Company which are beneficially owned by such
person, and (iv) any other information relating to such person that is required
to be disclosed in solicitations for proxies for election of directors pursuant
to any then existing rule or regulation promulgated under the Securities
Exchange Act of 1934, as amended. The shareholder giving the notice shall also
state (i) the name and record address of such shareholder, (ii) the class and
number of shares of capital stock of the Company which are beneficially owned by
such shareholder, and (iii) the period of time such shareholder held such
shares. The Company may require further information from any nominee. Members of
the Committee are N. A. Armstrong, T. E. Petry, J. L. Rees, J. J. Schiff, Jr.,
and D. S. Taft.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the only holders known by CG&E, based on
information set forth in their respective filings of Schedule 13G with the
Securities and Exchange Commission, to own beneficially more than 5% of any
class of the voting securities of CG&E as of December 31, 1993:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- --------------- ------------------------- ---------------------------------- --------
<S> <C> <C> <C>
Common Stock PNC Bank Corp. 7,040,510 shares (1) 7.99%
Fifth Ave. and Wood St.
Pittsburgh, PA 15222
Common Stock INVESCO PLC 5,298,403 shares (2) 6.02%
11 Devonshire Square
London EC2M 4YR
England
<FN>
- ---------
(1) Of these shares, 6,864,581 are held by PNC Bank, Ohio, N.A. as trustee of
two benefit plans for employees of CG&E and its subsidiaries. Under the
terms of the plans, participants have the right to vote the shares
credited to their accounts; however, the trustee may, at its discretion,
vote those shares not voted by participants.
(2) Of these shares, holder reports having shared voting and dispositive
powers with respect to all shares.
</TABLE>
6
<PAGE>
The following table sets forth the beneficial ownership of the voting
securities of CG&E held by each nominee, director, and named executive officer,
as well as directors and officers as a group, as of the record date:
<TABLE>
<CAPTION>
TITLE OF AMOUNT AND NATURE OF BENEFICIAL PERCENT
CLASS NAME OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------ ------------------------------ ---------------------------------------- --------
<S> <C> <C> <C>
Common Stock Neil A. Armstrong 750 shares, direct & indirect (1)
Common Stock Oliver W. Birckhead 5,250 shares, indirect (1)
Common Stock Terry E. Bruck 2,780 shares, indirect(2) (1)
Common Stock Clement L. Buenger 750 shares, indirect (1)
Common Stock Phillip R. Cox none
Common Stock C. Robert Everman 5,901 shares, indirect(2) (1)
Common Stock George C. Juilfs 3,750 shares, direct (1)
Common Stock Thomas E. Petry 2,000 shares, direct (1)
Common Stock Jackson H. Randolph 22,198 shares, direct & indirect(2) (1)
Common Stock Jane L. Rees 1,113 shares, direct (1)
Common Stock Stephen G. Salay 9,467 shares, direct & indirect(2) (1)
Common Stock John J. Schiff, Jr. 31,059 shares, direct & indirect(3) (1)
Common Stock Dudley S. Taft 3,000 shares, direct (1)
Common Stock Oliver W. Waddell 2,771 shares, direct (1)
Common Stock Robert P. Wiwi 4,945 shares, indirect(2) (1)
Common Stock All directors and officers 150,263 shares, direct & indirect(2) 0.17%
as a group
<FN>
- ---------
(1) For each individual listed, no one beneficially owned more than 0.04% of
the outstanding shares of Common Stock.
(2) Includes shares of Common Stock credited to each officer's account in the
Deferred Compensation
and Investment Plan (DCIP), a qualified defined contribution plan of CG&E
and its subsidiaries.
(3) Includes 15,000 shares owned of record by a trust, of which Mr. Schiff is
one of three trustees who share voting and investment power equally. Does
not include 1,132,500 shares, of which Mr. Schiff disclaims any beneficial
interest, held by Cincinnati Financial Corporation and certain of its
subsidiaries.
</TABLE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
CG&E's Regulations provide that directors who are also employees of the
Company receive no remuneration in the former capacity. Outside directors
(persons who are not directly employed by the Company) receive a monthly
retainer fee of $1,500 plus a fee of $1,000 for each Board meeting and Committee
meeting attended.
CG&E has established a retirement plan for outside directors. Such directors
must serve on the Board of Directors for more than 5 years to participate. The
retirement compensation begins the year following the later of the director's
retirement or reaching age 65. The plan provides retirement
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compensation for the same number of years as the director served on the Board of
Directors. The annual retirement compensation is equal to the director's final
annualized retainer fee plus the product of the fee paid for attendance at a
Board meeting, multiplied by five.
The following Summary Compensation Table sets forth the total compensation
paid to the Chief Executive Officer and to each of the additional four most
highly compensated executive officers for the calendar years ended December 31,
1993, 1992, and 1991.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------
(E)
OTHER (F)
(D) ANNUAL ALL OTHER
(A) (B) (C) BONUS(1) COMPEN- COMPENSATION(2)
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($) SATION($) ($)
- ---------------------------------------------------- --------- --------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Jackson H. Randolph 1993 425,000 200,000 3,512 84,886(3)
Chairman of the Board, President and Chief 1992 425,000 150,000 3,096 61,292
Executive Officer 1991 385,000 80,000 4,425 5,263
C. Robert Everman 1993 217,500 55,000 0 5,437
Senior Vice-President--Finance 1992 205,000 43,000 0 5,125
1991 190,000 28,500 0 4,317
Robert P. Wiwi 1993 193,188 48,700 941 4,830
Senior Vice-President--Customer and Corporate 1992 184,585 30,000 4,189 4,596
Services 1991 173,880 25,000 999 3,878
Terry E. Bruck 1993 169,333 42,800 843 0
Vice-President--Electric Operations 1992 158,997 30,000 2,725 0
1991 146,838 21,500 1,340 0
Stephen G. Salay 1993 161,895 41,000 0 4,047
Vice-President--Electric Production and Fuel Supply 1992 149,670 30,000 0 3,495
1991 138,578 18,500 2,407 3,178
<FN>
- ---------
(1) The 1993 bonuses were paid during 1993; 1992 bonuses were paid during
1993; 1991 bonuses were paid during 1992.
(2) The amounts listed for officers other than Mr. Randolph consist entirely
of employer matching contributions under the DCIP.
(3) The employer matching contributions for Mr. Randolph under the DCIP were
$5,745. Mr. Randolph received a salary increase in the amount of $50,000,
which was deferred at the Board of Directors' direction pursuant to the
terms of a Deferred Compensation Agreement effective as of January 1,
1992. The above-market interest on the deferred salary increase under the
Deferred Compensation Agreement is $12,766. The value of benefits under a
Split Dollar Life Insurance Agreement is $16,375.
</TABLE>
8
<PAGE>
The following Pension Plan Table illustrates the estimated annual benefits
payable upon retirement at age 65 for the years of service indicated under the
terms of the Company's Management Retirement Plan, a qualified defined benefit
plan, and Supplemental Executive Retirement Plan.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------
COMPENSATION 15 20 25 30 OR MORE
- ------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
$125,000 $ 46,875 $ 62,500 $ 78,125 $ 93,750
150,000 56,250 75,000 93,750 112,500
175,000 65,625 87,500 109,375 131,250
200,000 75,000 100,000 125,000 150,000
225,000 84,375 112,500 140,625 168,750
250,000 93,750 125,000 156,250 187,500
300,000 112,500 150,000 187,500 225,000
350,000 131,250 175,000 218,750 262,500
400,000 150,000 200,000 250,000 300,000
450,000 168,750 225,000 281,250 337,500
550,000 206,250 275,000 343,750 412,500
650,000 243,750 325,000 406,250 487,500
750,000 281,250 375,000 468,750 562,500
850,000 318,750 425,000 531,250 637,500
950,000 356,250 475,000 593,750 712,500
</TABLE>
For purposes of the plans, the amounts of covered compensation which can be
used to compute estimated annual retirement benefits include Salary and Bonuses
paid during the current year, which are set forth within the respective columns
of the Summary Compensation Table for the executive officers named therein. The
estimated credited years of service with the Company for the named executive
officers at normal retirement age 65 are as follows: J. H. Randolph, 37 years;
C. R. Everman, 42 years; R. P. Wiwi, 43 years; T. E. Bruck, 42 years; and S. G.
Salay, 26 years. The amounts set forth in this Pension Plan Table are subject to
deduction for social security benefits.
CG&E's executive officers, together with all other Executive, Supervisory,
Administrative, and Professional employees, participate in the noncontributory
Management Retirement Plan. The retirement income payable to a pensioner is 1.3%
of final average pay plus 0.35% of final average pay in excess of covered
compensation, times the number of years of accredited service through 30 years,
plus 0.1% of final average pay times the number of years of accredited service
over 30 years. Final average pay is the average annual
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<PAGE>
salary, based on July 1 pay rates, during the employee's five consecutive
calendar years producing the highest such average within the last 10 calendar
years immediately preceding retirement. Covered compensation is the average
Social Security taxable wage base over a 35-year period. Payments which begin
prior to age 60 are reduced by 5% a year.
CG&E's executive officers participate in the Company's Supplemental
Executive Retirement Plan which provides retirement, disability, and death
benefits. Upon retirement or death after age 55, the participant or designated
beneficiary will receive for a period of 15 years an annual amount equal to 75%
of the individual's highest annual compensation, reduced by social security
benefits and by amounts received from the Management Retirement Plan. Further
reductions will be made for fewer than 30 years of service and retirement prior
to age 60. In the case of a participant's death prior to age 60, the designated
beneficiary will receive 50% of the participant's final annual compensation
until the later of the date the participant would have reached age 65, or 10
years. If disabled, a participant will receive the supplemental retirement
benefits until the later of the participant's age 65, or 15 years. Benefits will
be paid monthly from the general funds of the Company. To provide funds to pay
such benefits, the Company purchased insurance on the lives of the participants
in the Plan. The Plan has been designed so that if the assumptions made as to
mortality experience, policy dividends, and other factors are realized, the
Company will eventually recover all premium payments, plus a factor for the use
of the Company's money.
EXECUTIVE SEVERANCE AGREEMENTS
CG&E has an Executive Severance Agreement with each executive officer, which
provides compensation to each officer in the event of his termination of
employment after a change in control of CG&E. Under the Agreement, if, within 36
months after a change in control, an executive officer's employment is
terminated for reasons other than cause, death, or disability, or he terminates
employment voluntarily for good reason, he is entitled to receive three times
his average annualized compensation for the most recent five taxable years
ending before a change in control, less $1,000. In addition, an executive is
entitled to receive payments under the Supplemental Executive Retirement Plan
and amounts equalling any excise taxes payable on the severance and supplemental
benefits. Good reason includes a mutual agreement respecting termination, a
reduction in base salary, change in assignment, reporting responsibilities,
title, office, any incentive arrangement, or in benefits such as vacation
allowance. As defined in the Agreement, a change in control occurs under the
following circumstances: CG&E's entering into an agreement to merge or
consolidate or to consummate a combination or majority share acquisition
arrangement in which its shareholders immediately prior to any such agreement or
arrangement would own less than 75% of the voting power of the surviving or new
corporation; in the event of a sale or disposition of all of CG&E's assets other
than to a subsidiary; in the event a person becomes a beneficial owner or
commences a tender offer resulting in such person's owning 25% or more of CG&E's
voting power, or, upon the election of a new majority of CG&E's Board of
Directors.
10
<PAGE>
MANAGEMENT COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Management Compensation Committee of the Board of Directors is
responsible for setting the direction for the overall executive compensation
strategy of the Company and the ongoing monitoring of the strategy's
implementation. The Committee makes recommendations to the full Board of
Directors with regard to executive compensation. The Committee is made up
entirely of outside (non-employee) directors.
The Committee is aware of and has reviewed the qualifying compensation
regulations issued by the Internal Revenue Service ("IRS"). The individual
compensation for executive officers of CG&E does not exceed the $1 million base
and, therefore, the Company is not affected by current IRS qualifying
compensation regulations.
The Committee's policies, in considering base salary and performance-based
annual incentives, are designed to provide competitive levels of compensation
that integrate pay with the Company's annual performance goals, reward
above-average corporate performance, recognize individual initiative and
achievements, and assist the Company in attracting and retaining qualified
executives. The Committee reviews data provided by the Edison Electric
Institute, which includes approximately 90 utility companies, considering those
companies of comparable size based on revenue (28 companies with revenues
ranging from one-two billion dollars). The compensation level for each executive
officer is reviewed based on an evaluation of compensation levels at such
companies for executives with similar job responsibilities, with the objective
of providing total compensation equivalent to approximately the 75th percentile.
The performance of each executive is evaluated based upon that individual's
performance for the year in relation to the established goals and objectives for
the year.
ANNUAL INCENTIVES
Under the Key Employee Annual Incentive Plan, the Chief Executive Officer is
eligible for additional compensation up to 35% of base pay, including deferred
compensation. Other senior officers are eligible for additional compensation up
to 25% of base pay. The Committee also has authority to appropriately adjust
incentive payments in light of extraordinary occurrences. The CEO's incentive
was so adjusted giving consideration to the accomplishments in 1993 toward the
completion of the proposed merger with PSI Resources, Inc. The granting of
additional compensation under the Plan is first subject to a Shareholder
Protection Trigger. This Trigger provides that no incentive payments shall be
made for 1993 unless dividends per share for the fiscal year 1993 equal or
exceed the amount per share paid in the previous fiscal year, and total per-tax
earnings, exclusive of the write-off pertaining to the disallowance of certain
costs relating to the Zimmer Station, are sufficient to cover all dividends
payable for 1993, plus the amount necessary to cover total awards payable under
the Plan. The amounts of any awards will vary depending on the meeting of
various goals established and
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approved by the Management Compensation Committee. Goals established
Company-wide for 1993 pertained to return on equity, the planned merger with PSI
Resources, Inc., overall customer satisfaction and relationships, corporate
culture initiatives, and cost control. Participants also set individual goals
relating to their departments. Any award is then subject to modification based
on the relative level of rates charged customers (Customer Protection Modifier).
The Customer Protection Modifier is based on the relative ranking of electric
and gas rates for the city of Cincinnati as compared to 30 and 26 cities,
respectively. If CG&E maintains its relative position, this Modifier has no
effect. If CG&E's relative position improves or declines, the awards payable are
subject to upward or downward adjustment, accordingly. The data on electric
rates is as published by the Edison Electric Institute, and by the American Gas
Association for gas rates. Because the Board recognizes that the interests of
shareholders and customers are paramount, the Shareholder Protection Trigger and
Customer Protection Modifier, as indicated above, are integral to the Plan.
For 1993, 57% of the Chief Executive Officer's bonus opportunity was based
on achievement of Company goals, and 43% was based upon the Committee's
determination of his achievement of individual goals. For other officers, 60
percent of the bonus opportunity was based on achievement of Company goals, and
40 percent was based upon the Chief Executive Officer's determination of their
achievement of individual goals, which determinations are recommended to the
Committee for approval. During 1993, sufficient goals were met to obtain the
maximum award available. The return on equity for 1993 was higher than
originally projected at the beginning of the year. Earnings per common share,
exclusive of the write-off pertaining to the disallowance of certain costs
relating to the Zimmer Station, increased 6% over 1992, and the quarterly common
dividend was increased from 41 1/2 cents to 43 cents. The successful strategies
developed and implemented to help PSI Resources, Inc. (CG&E's planned merger
partner) defend against the hostile takeover attempt by IPALCO Enterprises,
Inc., and in obtaining approval of the merger by shareholders were extremely
important for both customers and shareholders. Other goals pertaining to
customer satisfaction and relationships, corporate culture initiatives, and cost
control were also met. The relative importance in meeting these goals was equal
in the determination of awards. The Customer Protection Modifier was neutral
resulting in no upward or downward adjustment.
Management Compensation Committee
Oliver W. Birckhead, Chairman
George C. Juilfs
John J. Schiff, Jr.
Dudley S. Taft
Oliver W. Waddell
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Schiff, Chairman of the Board of Cincinnati Financial Corporation,
serves on the Management Compensation Committee of CG&E's Board of Directors and
Mr. Randolph, Chairman of the Board, President and Chief Executive Officer of
CG&E, serves on the Board of Directors of Cincinnati Financial Corporation.
CG&E and its subsidiaries carry various bond coverages, and also carry
insurance coverage for their directors, officers, and employees against certain
civil liabilities. During 1993, insurance premiums, amounting to approximately
$83,000, at competitive rates, were paid to the John J. & Thomas R. Schiff &
Co., Inc., of which Mr. Schiff is also Chairman of the Board.
PERFORMANCE GRAPH
The following line graph compares the five-year cumulative total shareholder
return of the Common Stock of the Company with the cumulative total returns
during the same five-year period of the S&P 500 Stock Index and the S&P Electric
Utilities Index. The graph assumes a $100 investment on January 1, 1989 and the
reinvestment of all dividends.
[GRAPHIC]
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APPOINTMENT OF AUDITORS
CG&E'S BOARD OF DIRECTORS RECOMMENDS VOTING FOR THIS PROPOSAL WHICH IS
DESIGNATED IN THE PROXY AS ITEM 2.
Subject to approval by holders of Common Stock, the Board of Directors of
CG&E, upon the recommendation of its Committee on Audit, appointed Arthur
Andersen & Co. as independent public accountants and auditors in connection with
the Company's accounting matters and to make timely quarterly reviews of the
consolidated financial statements of the Company and annual audits of the
accounts of the Company and its subsidiary companies, and such other audits of
the Company's related activities as may be required and/or approved by
governmental or regulatory bodies for the fiscal year ending December 31, 1994.
In making its recommendation, the Committee on Audit gave consideration to: the
past performance of Arthur Andersen & Co.; the firm's credentials, capabilities,
and reputation; a review of the firm's 1992 Results of their Peer Review; and a
review of their proposed engagement letter. Representatives of Arthur Andersen &
Co. are expected to be present at the Annual Meeting of Shareholders with the
opportunity to make a statement if they desire to do so, and will be available
to respond to questions.
SHAREHOLDER PROPOSAL
Mr. Allen Wolff, 1553 South Carpenter Rd., Brunswick, Ohio 44212, a holder
of record (as trustee) of Common Stock representing 280 shares, has informed
CG&E that he intends to present the proposal set forth below at the Annual
Meeting.
The affirmative vote of a majority of CG&E's Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting is required for
approval of the proposal. Abstentions indicated on properly executed proxies
will not be counted as either "for" or "against" this proposal. Broker non-votes
specified on proxies returned by brokers holding shares for beneficial owners
who have not provided instructions as to voting on this issue will be treated as
not present for voting on this issue.
THE BOARD OF DIRECTORS OPPOSES THE ADOPTION OF THIS PROPOSAL, WHICH IS
DESIGNATED IN THE PROXY AS ITEM 3, AND RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST
IT.
SHAREHOLDER PROPOSAL
Many shareholders of corporate stock feel frustrated when reading the annual
reports of some corporations. Often they report, in glowing terms, how
successful a year its has been and then report a loss of "jillions" of dollars.
In addition, they often report huge bonuses to corporate executives (for a job
well done) and then the Board of Directors requests that the stockholders
approve additional incentives for the upper management AND for the Board of
Directors. Often, THEN, a dividend is omitted because of the poor year.
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Many of us feel that the Board of Directors are a self-perpetuating group,
controlling huge numbers of votes, most often renominating themselves for
another term, stacking the board with friends and relatives, setting the number
of directors at whatever number fits their fancy, nominating someone new only to
fill a vacancy and then NEVER giving us more than one person to vote for each
vacancy. After all of this, the coup de grace is the statement on the ballot
"all unmarked proxies will be voted in accordance with the recommendations of
the Board of Directors".
Even in areas where voter fraud is rampant, although dead people may vote,
unmarked ballots are NOT counted. It seems very undemocratic to count unvoted
ballots one way or another. I cannot find in the By-Laws of this corporation any
authorization for counting unmarked ballots. Therefore, be it resolved that NO
UNVOTED BALLOTS SHALL BE COUNTED IN VOTING FOR THE MEMBERS OF THE BOARD OF
DIRECTORS NOR FOR ANY OTHER ISSUE PLACED BEFORE THE STOCKHOLDERS OF THIS
CORPORATION.
STATEMENT OF THE BOARD OF DIRECTORS IN
OPPOSITION TO THE SHAREHOLDER PROPOSAL
The Board of Directors believes that the intent of the foregoing proposal is
to prohibit properly executed but unmarked proxies from being counted in voting
for any matter described in the Company's proxy statement.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL IS CONTRARY TO THE
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND, ACCORDINGLY, RECOMMENDS THAT
SHAREHOLDERS VOTE AGAINST THE PROPOSAL FOR THE FOLLOWING REASONS:
Historically, the Company's proxy statements and proxy cards have provided
shareholders with the ability to grant a discretionary proxy in a manner
consistent with the applicable laws of the State of Ohio. Shareholders are not
required to mark their proxies for a matter described in the Company's proxy
statements in order to have their proxies counted in voting for such matter, so
long as they are properly signed. The federal proxy rules promulgated by the
Securities and Exchange Commission (the "SEC") explicitly recognize and permit
this practice, and the Company follows a format permitted by the SEC.
Each of the Company's proxy cards indicates in bold-face type how it will be
voted if no direction thereon is made by the shareholder. That information is
also contained in the text of the Company's proxy statements. The Board of
Directors believes that shareholders who take advantage of this procedure are
fully aware of how their proxies will be voted and do so because that procedure
provides a convenient method to indicate that the shareholder chooses to vote in
accordance with the Board's recommendations. This reflects customary procedures
consistently adhered to by all other public companies of which the Board is
aware. The proposal's deviation from customary procedures would be adverse to
the proxy process itself, as well as confusing to the overall shareholder
population.
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Because current procedures facilitate the execution and return of proxies,
the Board believes that the procedures result in a higher shareholder response
than could be expected if shareholders were required to complete each item on
the proxy card. This, in turn, helps to minimize the time and expense incurred
in connection with the solicitation of proxies.
The Board is not aware of any valid reason to adopt the procedure outlined
in the shareholder proposal. The proposal appears to reflect the implicit
assumption that shareholders are inadvertently returning properly executed but
unmarked proxies, unaware as to how they will be voted. The Board does not share
that assumption and believes that shareholders fully understand the process as
it now exists.
THE BOARD OF DIRECTORS URGES A VOTE AGAINST THIS PROPOSAL, ITEM 3. THE
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS
SPECIFY A CONTRARY CHOICE ON THEIR SIGNED PROXIES.
OTHER MATTERS
CG&E does not know of any other business to be presented at the meeting.
However, if any other business comes before the meeting, it is intended that the
holders of proxies solicited hereby will vote thereon in their discretion.
Any shareholder proposal intended to be presented at CG&E's 1995 Annual
Meeting of Shareholders should be sent to CG&E, Attention: Corporate Secretary,
and must be received not later than December 7, 1994.
On or about March 3, 1994, CG&E's 1993 Annual Report was mailed to all
shareholders of record through the latest practicable date, and subsequently to
others who became shareholders through the close of business on March 21, 1994.
The cost of soliciting proxies will be borne by CG&E. It is anticipated that
a limited number of regular employees of CG&E will solicit proxies by telephone
or in person, the cost of which is expected to be nominal. CG&E has retained
D.F. King & Co., Inc. to assist in the solicitation of proxies for a fee
estimated to be $7,000 plus reimbursement of reasonable out-of-pocket expenses.
CG&E does not expect to pay any additional compensation for the solicitation of
proxies; however, brokers and other custodians, nominees, or fiduciaries will be
reimbursed for their expenses in forwarding proxy material to principals and
obtaining their proxies.
If notice in writing is given to CG&E by any holder of Common Stock, in
accordance with law, not less than 48 hours before the time fixed for holding
the meeting, that the voting at the election of directors shall be cumulative,
provided that an announcement of the giving of such notice is made upon the
convening of the meeting, each holder of Common Stock has the right to cumulate
such voting
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power as each possesses. Each holder of Common Stock would then have the right
to give one nominee as many votes as the number of directors to be elected
multiplied by the number of his votes equals, or to distribute such votes on the
same principle among two or more nominees, as the holder desires.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
DONALD R. BLUM
SECRETARY
Dated: April 6, 1994
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[LOGO]
SERVICE
COMPANY
[LOGO]
SERVICE
COMPANY
------------
NOTICE
AND
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 1994
------------
THE CINCINNATI GAS & ELECTRIC COMPANY
139 EAST FOURTH STREET
CINCINNATI, OHIO 45202
Printed on recycled paper. [RECYCLED PAPER LOGO]
<PAGE>
PROXY THE CINCINNATI GAS & ELECTRIC COMPANY PROXY
The undersigned hereby appoints Jackson H. Randolph, C. Robert Everman, and
Donald R. Blum, or any of them, with power of substitution, as proxies to vote
the shares of Common Stock of the undersigned in The Cincinnati Gas & Electric
Company at the Annual Meeting of Shareholders to be held May 18, 1994 at 11:00
A.M. in the Oak Room of Piatt Park Center/Cincinnati Club Building, 30 Garfield
Place, Cincinnati, Ohio, and at any adjournment thereof, upon all business that
may properly come before the meeting, including the business identified (and in
the manner indicated) on this proxy and described in the proxy statement
furnished herewith.
Indicate your vote by an (X). The Board of Directors recommends voting FOR
Items 1 and 2.
ITEM
<TABLE>
<S> <C> <C> <C>
1. Election of / / FOR--ALL Nominees / / WITHHELD--ALL Nominees
Directors (except as marked to the contrary
below)
Nominees: Class III - Phillip R. Cox
Class I - Neil A. Armstrong, C. Robert Everman, John J. Schiff, Jr., and Dudley S. Taft
</TABLE>
INSTRUCTION--TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, MARK THROUGH THAT
NOMINEE'S NAME.
<TABLE>
<S> <C> <C> <C>
2. Appointment of Arthur Andersen & Co. as Auditors / / FOR / / AGAINST / / ABSTAIN
</TABLE>
The Board of Directors recommends voting AGAINST the following Item 3.
<TABLE>
<S> <C> <C> <C>
3. Shareholder Proposal / / FOR / / AGAINST / / ABSTAIN
</TABLE>
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE AND RETURNED PROMPTLY
IN THE ENCLOSED ENVELOPE.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS WHICH RECOMMENDS
VOTING FOR ITEMS 1 AND 2, AND AGAINST ITEM 3. IT WILL
BE VOTED AS SPECIFIED. IF NOT SPECIFIED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
Signature(s) _________________________________Date ______________________ , 1994
Please sign exactly as name(s) appear on this proxy. If joint
account, each joint owner should sign. If signing for a
corporation or partnership or as agent, attorney or Fiduciary,
indicate the capacity in which you are signing.
